RATIOS ANALYSIS

Presented by: TOUFEEQ AHMEDRegistration # 55302

PAF-Karachi Institute of Economics & Technology

Introduction to Business FinanceCourse Facilitator: Sir Sikandar Taj

Overview:

ENGRO FOODS LIMITED

Engro Foods Limited was officially launched as a fully owned subsidiary of Engro in 2004. Using dairy as a stepping stone to enter into the food business, the Company has established state-of-the-art processing units in Sukkur and Sahiwal, along with an ice cream production facility in Sahiwal.

Top quality brands like Olper’s, Olwell, Tarang, Omore and Owsum have been successfully launched under the helm of Company’s dairy products. To support these brands and their highest standards of quality, Engro Foods has invested heavily in milk processing and milk collection infrastructure.

Ratio Analysis

ENGRO FOODS

Ratio Analysis

1. Liquidity – the ability of the firm to pay its way

2. Investment/shareholders – information to enable decisions to be made on

the extent of the risk and the earning potential of a business investment

3. Gearing – information on the relationship between the exposure of the

business to loans as opposed to share capital

4. Profitability – how effective the firm is at generating profits given sales and

or its capital assets

5. Financial – the rate at which the company sells its stock and the efficiency

with which it uses its assets

Ratio Analysis

Ratio AnalysisFinancial Data Values in '000

Input Data 2008 2009 2010

Current assets 12,042,221 10,748,871 3,114,550Fixed assets 45,122,518 82,960,567 27,896,393Total assets 57,164,739 93,709,438 31,010,943Average total assets 28,582,370 46,854,719 15,505,472Cash and cash equivalents 1,687,038 3,955,342 808,584Inventory 4,680,896 422,607 2,551,752Average inventory 4,680,896 2,551,752 1,487,179Current liabilities 5,999,353 6,395,469 3,654,457Total liabilities 36,111,133 66,821,200 3,657,304Owners' equity 21,053,606 26,888,238 27,053,639Number of common shares 212,816,117 297,942,563 327,736,819Average number of common shares 212,816,117 255,379,340 312,839,691Average owners' equity 21,053,606 23,970,922 26,970,939Market price per share 96.46 183.27 193.81 Devidend Paid 425,632 595,885 555,473Book Value per share 98.93 105.29 86.48 Total Sales 23,317,198 30,171,520 26,744,359Operating expenses 1,657,815 195,176 388,652Operating income 4,538,748 4,986,168 4,762,458Other expense 579,556 424,110 38,773Earnings before interest and taxes 6,713,522 6,535,525 1,904,106Interest expense 1,508,948 1,320,579 92,131Net income 4,240,430 3,957,250 1,675,959

1. Current Ratio:

Current AssetsCurrent Liabilities

Ratio Analysis

Comments:

1. Liquidity Ratio

12,042,221 2.01 10,748,871 1.68 3,114,550 0.855,999,353 6,395,469 3,654,457

2008 2009 2010

== =

2. Quick Ratio::

Current Assets – Inventory Current Liabilities

Ratio Analysis

Comments:

1. Liquidity Ratio

12,042,221 - 4,680,896 = 1.23 10,748,871 - 422,607 = 1.61 3,114,550 - 2,551,752 = 0.15

2008 2009 2010

5,999,353 6,395,469 3,654,457

3. Net Working Capital Ratio:

Current Assets – Current LiabilityTotal Assets

Ratio Analysis

Comments:

1. Liquidity Ratio

12,042,221 - 5,999,353 = 0.11 10,748,871 - 6,395,469 = 0.05 3,114,550 - 3,654,457 = (0.02)57,164,739

2008

93,709,438 31,010,943

2009 2010

4. Cash Ratio:

Cash & Cash EquivalentCurrent Liability

Ratio Analysis

Comments:

1. Liquidity Ratio

1,687,038 = 0.28 3,955,342 = 0.62 808,584 = 0.225,999,353 6,395,469 3,654,457

2008 2009 2010

5. Operating Ratio:

Operating ExpensesOperating Income

Ratio Analysis

Comments:

1. Liquidity Ratio

1,657,815 = 0.37 195,176 = 0.04 388,652 = 0.084,538,748 4,986,168 4,762,458

2008 2009 2010

6. Operating Expenses to Sales:

Operating ExpensesTotal Net Sales

Ratio Analysis

Comments:

1. Liquidity Ratio

1,657,815 = 7.11% 195,176 = 0.65% 388,652 = 1.45%23,317,198 30,171,520 26,744,359

2008 2009 2010

7. Inventory Turnover Ratio:

Total Sales Average Inventory

Ratio Analysis

Comments:

2. Assets Ratio

8. Fixed Assets Turnover Ratio::

Total Sales Fixed AssetsIf

Ratio Analysis

Comments:

2. Assets Ratio

52% = 23,317,198 36% = 30,171,520 96% = 26,744,35945,122,518 82,960,567 27,896,393

20102008 2009

9. Total Assets Turnover Ratio:

Total Sales Total Assets

Ratio Analysis

Comments:

2. Assets Ratio

41% = 23,317,198 32% = 30,171,520 86% = 26,744,35957,164,739 93,709,438 31,010,943

20102008 2009

10. Assets to Equity Ratio:

Total AssetsOwner’s Equity

Ratio Analysis

Comments:

2. Assets Ratio

2.72 = 57,164,739 3.49 = 93,709,438 1.15 = 31,010,94321,053,606 26,888,238 27,053,639

20102008 2009

11. Return on Assets Ratio:

Net IncomeAverage Total Assets

Ratio Analysis

Comments:

3. Profitability Ratio

15% = 4,240,430 8% = 3,957,250 11% = 1,675,95928,582,370 46,854,719 15,505,472

2008 2009 2010

12. Return on Equity Ratio:

Net IncomeAverage Owner’s Equity

Ratio Analysis

Comments:

3. Profitability Ratio

0.20 = 4,240,430 0.17 = 3,957,250 0.06 = 1,675,95921,053,606 23,970,922 26,970,939

2008 2009 2010

13. Profit Margin Ratio:

Net IncomeTotal Net Sales

Ratio Analysis

Comments:

3. Profitability Ratio

18% = 4,240,430 13% = 3,957,250 6% = 1,675,95923,317,198 30,171,520 26,744,359

2008 2009 2010

14. Basic Earning Ratio:

Earning Before Interest & TaxesTotal Assets

Ratio Analysis

Comments:

3. Profitability Ratio

12% = 6,713,522 7% = 6,535,525 6% = 1,904,10657,164,739 93,709,438 31,010,943

20102008 2009

15. Total Debt Ratio:

Total LiabilitiesTotal Assets

Ratio Analysis

Comments:

4. Debt Ratio

0.63 = 36,111,133 0.71 = 66,821,200 0.12 = 3,657,304 57,164,739 93,709,438 31,010,943

2008 2009 2010

16. Interest Coverage Ratio:

EBITInterest Expense

Ratio Analysis

Comments:

4. Debt Ratio

4.45 = 6,713,522 4.95 = 6,535,525 20.67 = 1,904,106 1,508,948 1,320,579 92,131

2008 2009 2010

17. Debt/Equity Ratio:

Total LiabilityOwner’s Equity

Ratio Analysis

Comments:

4. Debt Ratio

1.72 = 36,111,133 2.49 = 66,821,200 0.14 = 3,657,304 21,053,606 26,888,238 27,053,639

2008 2009 2010

18. Earning Per Share (EPS) Ratio:

Net IncomeAverage No. of Common Stock

Ratio Analysis

Comments:

5. Market Ratio

19.93 = 4,240,430,000 15.50 = 3,957,250,000 5.36 = 1,675,959,000212,816,117 255,379,340 312,839,691

2008 2009 2010

19. Prince to Earning Ratio:

Market Price Per ShareEarning Per Share

Ratio Analysis

Comments:

5. Market Ratio

4.84 = 96.46 11.83 = 183.27 36.18 = 193.8119.93 15.50 5.36

2008 2009 2010

20. Dividend Payout Ratio:

Dividend PaidNet Income

Ratio Analysis

Comments:

5. Market Ratio

0.10 = 425,632 0.15 = 595,885 0.33 = 555,4734,240,430 3,957,250 1,675,959

2008 2009 2010

Questions